Footsie down on inflation news

Fears that Vodafone could be dragged into another high-profile bid battle and higher inflation conspired to send the London market into the red today.

Shares in Vodafone fell 3.5p to 139.5p following a report that its US ally Verizon was considering a 40 billion US dollar (£20.8bn) offer for a key rival.

It contributed to the FTSE 100 Index sliding 14 points to 4722.8 at the close and overshadowed a positive trading upbeat from banking giant HBOS.

Firmer-than-expected inflation figures, with the consumer prices measure up 0.3% to 1.5%, also put pressure on the top flight.

The report of a possible bid by Verizon for Sprint spooked investors just months after Vodafone knocked confidence with a failed bid for AT&T Wireless.

Investors in Vodafone had been hoping that the company would return cash to shareholders or invest elsewhere in its empire rather than make a big acquisition in the US.

The stock was under pressure on another front as an investment bank scaled back an earlier forecast that the group would outperform the sector.

Alliance & Leicester was the heaviest top-flight faller, down 22.5p to 878p, as traders fretted ahead of tomorrow’s trading statement.

On a brighter note, HBOS shares surged 3% – up 30p to 806p – after the company told the market it expected results ahead of expectations. It also promised to buy back £750 million of shares next year.

A clutch of rival stocks benefited from the update with Lloyds TSB up 0.75p at 443.75p and HSBC 3p stronger at 873p.

There were also gains for publisher Pearson after it announced a deal to sell its 79% stake in the owner of Spanish sports newspaper Marca. The £500 million proceeds from the sale impressed analysts as shares rose 3.5p to 617p.

Outside the top flight, tour operator First Choice Holidays surged 6%, or 8p to 151.5p, after announcing record profits amid signs that a recent business shake-up was bearing fruit.

Carpetright rose 51p to 1140p, following a 12% rise in half-year operating profits to £31.9 million.

And shares in crash test dummy maker First Technology advanced 4% or 14p to 357.5p after it reported trading profits of £13.5 million at the interim stage and said the second half of its financial year had begun well.

But hospital software group iSoft faded 10% or 39.5p to 339p after its finance director quit and half-year revenues of £96.3 million failed to meet market hopes.

Electricity and water group United Utilities added 6p to 622p as investors warmed to news that it is to cut 200 jobs over three years as part of a drive to meet “demanding” new efficiency targets.

The highest Footsie risers today were HBOS up 30p to 806p, Hilton adding 7.25p to 270.75p, William Hill up 13.5p to 558.5p and Kingfisher adding 5.75p to 306p.

The heaviest fallers were Alliance & Leicester down 22.5p to 878p, Vodafone off 3.5p to 139.5p, Enterprise Inns down 12p to 726.5p and Sage off 2.75p to 193.75p.